AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIMESTONE INVESTMENT PARTNERS L.P.
A DELAWARE LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
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ARTICLE I
CERTAIN DEFINITIONS.....................................................................2
ARTICLE II
THE PARTNERSHIP.........................................................................11
2.1 Organization.......................................................................11
2.2 Partnership Name...................................................................11
2.3 Purpose............................................................................12
2.4 Principal Place of Business........................................................12
2.5 Term...............................................................................12
2.6 Scope of Authority.................................................................12
2.7 Reservation of Other Business Opportunities........................................12
2.8 Filings; Agent for Service of Process..............................................12
ARTICLE III
PARTNERS' CAPITAL CONTRIBUTIONS; ADDITIONAL FINANCING AND CONTRIBUTIONS.................13
3.1 Scheduled Capital Contributions....................................................13
3.2 Capital Accounts...................................................................13
3.3 Additional Financing...............................................................13
3.4 Capital Calls......................................................................13
3.5 Additional Loans or Capital Contributions by Partners..............................14
3.6 No Third Party Beneficiaries.......................................................14
ARTICLE IV
ALLOCATIONS ............................................................................14
4.1 Profits and Losses.................................................................14
4.2 Allocation of Losses...............................................................15
4.3 Special Allocations................................................................15
4.4 Curative Allocations...............................................................17
4.5 Other Allocation Rules.............................................................18
4.6 Tax Allocations; Code Section 704(c)...............................................18
ARTICLE V
DISTRIBUTIONS ..........................................................................20
5.1 Distributions of Available Cash Flow...............................................20
5.2 Withholding........................................................................20
ARTICLE VI
MANAGEMENT OF PARTNERSHIP...............................................................20
6.1 Management of Partnership..........................................................20
6.2 General Partner....................................................................20
6.3 Approval of the General Partner....................................................20
6.4 Duties of General Partner..........................................................21
6.5 Compensation of Partners...........................................................22
6.6 Budget.............................................................................22
6.7 Limitation of Liability............................................................22
6.8 Indemnification....................................................................23
6.9 No Participation in Management.....................................................23
6.10 No Personal Liability.............................................................23
ARTICLE VII
BOOKS AND RECORDS.......................................................................23
7.1 Books and Records..................................................................23
7.2 Bank Accounts......................................................................23
7.3 Tax Returns........................................................................24
7.4 Tax Decisions and Elections........................................................24
7.5 Tax Examination....................................................................25
7.6 Financial Statements...............................................................25
ARTICLE VIII
TRANSFER OR ASSIGNMENT OF PARTNERSHIP INTERESTS.........................................26
8.1 Restrictions on Transfer...........................................................26
8.2 Effect of Transfers................................................................26
ARTICLE IX
SINGLE PURPOSE ENTITY...................................................................26
9.1 Single Purpose Entity..............................................................26
9.2 No Amendments......................................................................26
9.3 Other Provisions Regarding Operation of the Partnership............................26
ARTICLE X
DISSOLUTION AND WINDING UP..............................................................28
10.1 Liquidating Events................................................................28
10.2 Winding Up........................................................................28
10.3 Deficit Capital Account Balance...................................................29
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ARTICLE XI
MISCELLANEOUS...........................................................................30
11.1 Notices...........................................................................30
11.2 Binding Effect....................................................................31
11.3 Third Parties.....................................................................31
11.4 Remedies Cumulative...............................................................31
11.5 Construction......................................................................32
11.6 Headings..........................................................................32
11.7 Severability......................................................................32
11.8 Incorporation by Reference........................................................32
11.9 Further Action....................................................................32
11.10 Variation of Pronouns and Descriptive Adverbs....................................32
11.11 Governing Law....................................................................32
11.12 Waiver of Action for Partition...................................................32
11.13 Counterpart Execution............................................................32
EXHIBIT A PARTNER'S CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND PERCENTAGE INTEREST
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIMESTONE INVESTMENT PARTNERS L.P.
A DELAWARE LIMITED PARTNERSHIP
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
(this "AGREEMENT") is entered into this 26th day of September, 2000, by and
among PG/Primestone, L.L.C., a Delaware limited liability company ("PRIME
GP"), as the general partner, and The Prime Group, Inc., an Illinois
corporation ("PGI"), as the limited partner (the foregoing parties are
sometimes hereinafter collectively referred to as the ("PARTNERS"), pursuant
to the provisions of the Delaware Revised Uniform Limited Partnership Act, on
the following terms and conditions:
WITNESSETH:
WHEREAS, in connection with the desire of BRE/Primestone
Investment Management L.L.C., a Delaware limited liability company,
BRE/Primestone Investment L.L.C., a Delaware limited liability company,
(collectively, "Blackstone") and Prime GP to establish a limited partnership
to own a partnership interest in Prime Group Realty, L.P., a Delaware limited
partnership (the "Operating Partnership"), such partners entered into that
certain Agreement of Limited Partnership of Primestone Investment Partners
L.P., dated as of November 17, 1997 (the " Original Primestone LP Agreement");
WHEREAS, on the date hereof, all of Blackstone's
partnership interests in Primestone Investment Partners L.P. (the
"Partnership) were redeemed by the Partnership pursuant to Section 9.5 of the
Primestone LP Agreement;
WHEREAS, on the date hereof, PGI made a capital
contribution to the Partnership and was admitted to the Partnership as a
limited partner;
WHEREAS, to reflect the foregoing and the agreements of
Prime GP with PGI in connection therewith, Prime GP and PGI desire to amend
and restate the Original Primestone LP Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals
and the mutual covenants and agreements of the Partners herein contained, the
Partners agree to amend and restate the Original Primestone LP Agreement so
that such agreement, as restated, reads, in its entirety, as follows:
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ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall
have the meanings set forth in this ARTICLE I (such meanings to be equally
applicable in both the singular and plural forms of the term defined).
1.1 "ACT" means the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time (or any corresponding
provisions of succeeding law).
1.2 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with
respect to any Partner, the deficit balance, if any, in such Partner's
Capital Account as of the end of the relevant Partnership taxable year, after
giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this
Agreement or pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or is
deemed to be obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704- 1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
1.3 "AFFILIATE" means, with respect to any Partner,
any Person that is controlling, controlled by or under common control with a
Partner (whether such control is through the ownership of voting securities,
by contract or otherwise).
1.4 "AGREEMENT" or "PARTNERSHIP AGREEMENT" means this
Amended and Restated Agreement of Limited Partnership, as amended from time
to time.
1.5 "APPROVED BY THE GENERAL PARTNER" or any similar
phase used in this Agreement, means approved in writing by the General
Partner.
1.6 "AVAILABLE CASH FLOW" means, with respect to the
applicable period of measurement (i.e., any period beginning on the first day
of the fiscal year or other period commencing immediately after the last day
of the calculation of Available Cash Flow which was distributed, and ending
on the last day of the month, quarter or other applicable period immediately
preceding the date of calculation), the excess, if any, of the gross cash
receipts of the Partnership for such period from all sources whatsoever,
including, without limitation, the following:
(a) (i) all rents, revenues, income, dividends,
distributions and proceeds received by the Partnership; (ii) all proceeds and
revenues received on account of any sales of Property of the Partnership or
on account of any loans made to the Partnership or financings or refinancings
of any Property of the Partnership; (iii) all Capital Contributions received
by the
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Partnership from its Partners; (iv) all cash amounts previously reserved by the
Partnership, if the General Partner determines that the specific purposes for
which such amounts were reserved are no longer applicable; and (v) the proceeds
of liquidation of the Partnership's Property in accordance with this Agreement:
over the sum of:
(b) (i) all operating costs and expenses of the
Partnership; (ii) all costs and expenses expended during such period in
connection with the sale, other disposition, financing or refinancing of
Property; (iii) all fees under this Agreement paid during such period; (iv)
all debt service, including principal and interest, paid during such period
on all indebtedness of the Partnership; (v) all loans made by the Partnership
to any Person during such period, to the extent Approved by the General
Partner; and (vi) all reserves Approved by the General Partner for debt
service or other purposes.
1.7 "BUDGET" has the meaning set forth in SECTION 6.6.
1.8 "CAPITAL ACCOUNT" means, with respect to any
Partner, the Capital Account maintained for such Partner in accordance with
the following provisions:
(i) To each Partner's Capital Account there shall be
credited the amount of cash and the Gross Asset Value of any property
contributed by such Partner to the Partnership, such Partner's
distributive share of Profits and any items in the nature of income or
gain which are specially allocated pursuant to ARTICLE IV hereof, and
the amount of any Partnership liabilities assumed by such Partner or
which are secured by any Property distributed to such Partner.
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any Property
distributed to such Partner pursuant to any provision of this
Agreement, such Partner's distributive share of Losses and any items in
the nature of expenses or losses which are specially allocated pursuant
to ARTICLE IV hereof, and the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership.
(iii) In determining the amount of any liability for
purposes of the foregoing subparagraphs (i) and (ii), there shall be
taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with
Regulations Sections 1.704-1(b) and 1.704-2 and Section 514(c)(9), and shall
be interpreted and applied in a manner consistent with such Regulations. In
the event the General Partner shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed Property or which are assumed
by the Partnership, General Partner or the Limited Partner) are computed in
order to comply with such Regulations, the General Partner may make such
modification provided that such modification is not likely to have a material
adverse effect on the amounts distributable to any Partner pursuant to
ARTICLE IX hereof upon the dissolution of the
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Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to comply with Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Sections 1.704-1(b) or 1.704-2 or Section 514(c)(9).
1.9 "CAPITAL CONTRIBUTIONS" means, with respect to any
Partner, the amount of money and the initial Gross Asset Value of any
property (other than money), net of the amount of any debt to which such
property is subject, contributed to the Partnership with respect to the
Interest in the Partnership held by such Partner. The principal amount of a
promissory note which is not readily tradable on an established securities
market and which is contributed to the Partnership by the maker of the note
shall not be included in the Capital Account of any Person until the
Partnership makes a taxable disposition of the note or until (and to the
extent) such Partner makes principal payments on the note, all in accordance
with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
1.10 "CAPITAL LOAN" has the meaning set forth in SECTION
3.4(b).
1.11 "CASH NEEDS NOTICE" has the meaning set forth in
SECTION 3.4(a).
1.12 "CERTIFICATE" shall mean the Certificate of
Limited Partnership of the Partnership to be filed with the Secretary of
State of Delaware in accordance with the Act, as such Certificate has
heretofore been, or may hereafter be, amended and/or restated from time to
time.
1.13 [Reserved]
1.14 "CODE" means the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).
1.15 "CONTRIBUTING PARTNER" has the meaning set forth in
SECTION 3.4(b).
1.16 [Reserved]
1.17 "DEPRECIATION" means, for each Partnership taxable
year or other period, an amount equal to the depreciation, amortization or
other cost recovery deduction allowable with respect to an asset for such
year or other period, except that, if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, Depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or other cost recovery deduction for
such year or other period bears to such beginning adjusted tax basis;
PROVIDED, HOWEVER, that, if the federal income tax depreciation, amortization
or other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner; and provided, further,
however, that to the extent that the "remedial" method described in
Regulations Section 1.704-3 is elected Depreciation will be determined in a
manner consistent therewith.
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1.18 "DISABLING EVENT" means any event which would
cause a General Partner to cease to be a general partner of the Partnership
pursuant to Section 17-402 of the Act.
1.19 "FINANCE" means PG Finance I, Inc., a Delaware
corporation, which is a Single Purpose Entity.
1.20 "GENERAL PARTNER" means Prime GP or any Person who
has become the General Partner pursuant to the terms of this Agreement and
has not ceased to be the General Partner.
1.21 "GOVERNMENTAL APPROVAL" means any authorization,
consent, approval, waiver, exemption, variance, franchise, permit or license
required to be obtained from or granted by a Governmental Authority.
1.22 "GOVERNMENTAL AUTHORITY" means the United States,
any state of the United States, any political subdivision of any of them and
any agency, department, commission, board, bureau or instrumentality of any
of them, having jurisdiction over the Partnership.
1.23 "GROSS ASSET VALUE" means, with respect to any
asset, the asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair
market value of such asset, as determined by the contributing Partner
and the General Partner; provided the Units contributed by PGI or Prime
GP to the Partnership shall be valued on the date of contribution as if
they have been converted into common shares of PGRT and using the Value
of the common shares resulting from such conversion on the date of
contribution;
(ii) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross fair market values,
as reasonably determined by the General Partner, as of the following
times: (a) the acquisition of an additional Interest in the Partnership
by any new or existing Partner in exchange for more than a DE MINIMIS
Capital Contribution; (b) the distribution by the Partnership to a
Partner of more than a DE MINIMIS amount of Partnership assets,
including money, as consideration for an Interest in the Partnership;
and (c) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); PROVIDED, HOWEVER, that
adjustments pursuant to clauses (a) and (b) above shall be made only if
the General Partner reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market value of such
asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and the definition of "Capital Account" hereof;
PROVIDED, HOWEVER,
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that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent the General Partner determines that an
adjustment pursuant to the foregoing subparagraph (ii) of this
definition hereof is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this subparagraph.
If the Gross Asset Value of an asset has been determined or adjusted pursuant
to any of the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.
1.24 "INDEPENDENT DIRECTOR" means, a member of the
Board of Directors of a Single Purpose Entity that is not at the time of
initial appointment and has not been at any time during the preceding five
(5) years: (a) a stockholder, director, officer, employee or partner of (i)
PGI, or any of its Affiliates (except as an independent director on any of
the boards of directors), (ii) Prime Group Realty, L.P., a Delaware limited
partnership (the "Operating Partnership") or any of its Affiliates (except as
independent director on any of the boards of directors), (iii) such Single
Purpose Entity or any of its Affiliates (except as independent director on
any of the boards of directors) or (iv) Prime Group Realty Trust, a Maryland
real estate investment trust, or any of its Affiliates (except as independent
director on any of the boards of directors) (collectively, the "Prime
Entities"); (b) a customer, supplier or other Person who derives more than 1%
of its purchases or revenues from its activities with the Prime Entities; (c)
a Person or other entity controlling or under common control with any such
stockholder, partner, customer, supplier or other Person; or (d) a member of
the immediate family of any such stockholder, director, officer, employee,
partner, customer, supplier or other Person. (As used herein, the term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a
Person or entity, whether through ownership of voting securities, by contract
or otherwise.)
1.25 "INTEREST" means a Partner's ownership interest in
the Partnership, including any and all benefits to which the holder of such
an Interest may be entitled as provided in this Agreement, together with all
obligations of such Partner to comply with the terms and provisions of this
Agreement.
1.26 "LIMITED PARTNER" means any Person which (i) is
referred to as such in the first paragraph of this Agreement or who has
become a Limited Partner pursuant to the terms of this Agreement and (ii) has
not ceased to be a Limited Partner pursuant to the terms of this Agreement.
"Limited Partner" means all Limited Partners if at any time there shall be
more than one Limited Partner.
1.27 "LIQUIDATING EVENTS" has the meaning set forth in
SECTION 10.1.
1.28 "LIQUIDATOR" has the meaning set forth in SECTION
10.2.
1.29 "LOAN DOCUMENTS" means any document pursuant to which
any indebtedness for borrowed money of the Partnership has been incurred.
1.30 [Reserved]
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1.31 "NON-CONTRIBUTING PARTNER" has the meaning set forth
in SECTION 3.4(b).
1.32 "NONDEFAULTING PARTNER" has the meaning set forth in
SECTION 9.2.
1.33 "NONRECOURSE DEDUCTIONS" has the meaning set forth
in Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions for a
Partnership taxable year equals the excess, if any, of the net increase, if
any, in the amount of Partnership Minimum Gain during that Partnership
taxable year over the aggregate amount of any distributions during that
Partnership taxable year of proceeds of a Nonrecourse Liability that are
allocable to an increase in Partnership Minimum Gain, determined according to
the provisions of Regulations Section 1.704-2(c).
1.34 "NONRECOURSE LIABILITY" has the meaning set forth in
Regulations Section 1.704-2(b)(3).
1.35 "OP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated November
17, 1997, as such agreement has heretofore been or may hereafter be amended,
modified, supplemented or restated subsequent to the date thereof.
1.36 "OPERATING PARTNERSHIP" has the meaning set forth
in the recitals hereto.
1.37 "PARTIES" has the meaning set forth in SECTION 6.8.
1.38 "PARTNER MINIMUM GAIN" has the meaning set forth
in the definition of "partner nonrecourse debt minimum gain" in Regulations
Section 1.704-2(I)(2) and will be computed as provided in Regulations Section
1.704-2(I)(3).
1.39 "PARTNER NONRECOURSE DEBT" has the meaning set
forth in Regulations Section 1.704-2(b)(4).
1.40 "PARTNER NONRECOURSE DEDUCTIONS" has the meaning
set forth in Regulations Section 1.704-2(I). The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership taxable year equals the excess, if any, of the net increase, if
any, in the amount of Partner Minimum Gain attributable to such Partner
Nonrecourse Debt during that Partnership taxable year over the aggregate
amount of any distributions during that Partnership taxable year to the
Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent such distributions are from the proceeds of such Partner
Nonrecourse Debt and are allocable to an increase in Partnership Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(I).
1.41 "PARTNERS" means the General Partner and the
Limited Partner, where no distinction is required by the context in which the
term is used herein. "Partner" means any one of the Partners. All references
in this Agreement to a majority interest or a specified percentage of the
Partners shall mean Partners whose combined Percentage Interests represent
more than 50% or such specified percentage, respectively, of the Percentage
Interests then held by all Partners.
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1.42 "PARTNERSHIP" means the partnership formed
pursuant to this Agreement and the partnership continuing the business of
this Partnership in the event of dissolution as herein provided.
1.43 "PARTNERSHIP MINIMUM GAIN" has the meaning set
forth in Regulations Section 1.704-2(b)(2) and will be computed as provided
in Regulations Section 1.704-2(d).
1.44 "PERCENTAGE INTEREST" means the percentage set
forth for the General Partner and Limited Partner on EXHIBIT A hereto, as the
same may be adjusted from time to time in accordance with the terms of this
Agreement.
1.45 "PERSON" means any individual, general
partnership, limited partnership, limited liability company, corporation,
trust or other association or entity.
1.46 "PGRT" means Prime Group Realty Trust, a Maryland
business trust.
1.47 "PROFITS" and "LOSSES" and reference to any item
of income, gain, loss or deduction thereof, means, for each Partnership
taxable year or other period, an amount equal to the Partnership's taxable
income or loss for such year or period, determined in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition shall be added to such
taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and
not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such taxable
income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (ii) or (iv) of the
definition of Gross Asset Value hereof, the amount of such adjustment
shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of
property shall be computed by reference to the Gross Asset Value of the
property disposed of notwithstanding that the adjusted tax basis of
such property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Partnership taxable year or other period, computed in accordance with
the definition of Depreciation herein;
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(vi) Notwithstanding any other provision of this
definition of "Profits" and "Losses," any items which are specially
allocated pursuant to ARTICLE IV hereof shall not be taken into account
in computing Profits or Losses; and
(vii) The distribution of any property to a partner in
which taxable gain or loss is not recognized, in whole or in part,
shall be treated as if the Partnership sold such property for its Gross
Asset Value.
1.48 "PROPERTY" means Units in the Operating
Partnership and any other cash or investments or other assets held by the
Partnership.
1.49 "PRUDENTIAL LOAN AGREEMENT" means that certain
amended and restated credit agreement dated as of the date hereof, as
subsequently amended, modified, supplemented or restated, pursuant to which
the Partnership has borrowed up to $40,000,000 from P-B Finance Ltd. (the
"Prudential Lender"), the proceeds of which were used to purchase Units
1.50 "PRUDENTIAL LOAN" means the loan, in the principal
amount of $40,000,000, made by Prudential Securities Credit Corporation
pursuant to that certain Credit Agreement, dated as of November 17, 1997,
between Prudential Securities Credit Corporation and the Partnership, as
amended and restated by that certain Amended and Restated Credit Agreement,
dated as of the date hereof, between the Prudential Lender and the
Partnership.
1.51 "REGULATIONS" means the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as such
regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
1.52 "REQUESTED AMOUNT" has the meaning set forth in
SECTION 3.4(a).
1.53 "REQUIRED FUNDS" has the meaning set forth in
SECTION 3.3.
1.54 "SINGLE PURPOSE ENTITY" means a corporation,
limited partnership or limited liability company which (a) (i) is organized
solely for the purpose of holding, directly, a membership interest in Prime
GP or (ii) is organized solely for the purpose of holding, directly, the
Units; (b) will not engage in any business unrelated to its interest in Units
or Prime GP, as applicable; (c) will not have any assets unrelated to its
interest in the Units or Prime GP, as applicable; (d) as long as either of
the Notes (as defined in the agreements underlying the Vornado Loan and the
Prudential Loan) is outstanding, will not engage in, seek nor consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale,
transfer of partnership or membership interests, or amendment in any material
respect of its limited liability company agreement, limited partnership
agreement, articles of incorporation, articles of organization, certificate
of formation or operating agreement (as applicable) (provided, however, that
any amendments which amend any provisions of such documents which are
included in this definition of "Single Purpose Entity" or would cause such
entity to not comply with the terms of this definition of "Single Purpose
Entity" shall be deemed to be material); (e) if such entity is a limited
partnership, has as its only general partner a Single-Purpose Entity which is
either (A) a corporation or (B) a limited liability company which has at
least one member that is a Single Purpose Entity which is a corporation and
such corporation is the administrative member of such limited liability
company and has the characteristics of a Single Purpose Entity applicable to
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corporations; (f) if such entity is a corporation, at all relevant times will
have at least one Independent Director; (g) if such entity is a corporation,
the board of directors of such entity may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including an Independent Director, shall have
participated in such vote; (h) has not and will not fail to correct any known
misunderstanding regarding the separate identity of such entity; (i) if such
entity is a limited liability company, has at least one member that is a
Single Purpose Entity which is a corporation and has the characteristics of a
Single Purpose Entity applicable to corporations; (j) without the unanimous
consent of all of the directors, including, but not limited to, the
Independent Director, of such entity or such entity's general partner or
administrative member, as applicable, will not with respect to itself or to
any other entity in which it has a direct or indirect legal or beneficial
ownership interest: (A) file a bankruptcy, insolvency or reorganization
petition or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally, (B) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such entity or all or any portion of
such entity's properties, (C) make any assignment for the benefit of such
entity's creditors or (D) take any action that might cause such entity to
become insolvent; (k) will maintain its accounts, books and records separate
from any other person or entity; (l) will not commingle its funds or assets
with those of any other entity; (m) has held and will hold its property in
its own name; (n) will conduct its business in its name; (o) will maintain
its financial statements, accounting records and other entity documents
separate from any other person or entity; (p) will pay its own liabilities
out of its own funds and assets; (q) will observe all partnership, corporate
or limited liability company formalities, as applicable; (r) will maintain an
arm's-length relationship with its Affiliates; (s) does not have any
indebtedness other than as permitted by the Credit Documents or the Loan
Documents (as such terms are defined in the underlying agreements of the
Vornado Loan and the Prudential Loan); (t) will not assume or guarantee or
become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity except for
each of the Notes; (u) will not acquire obligations or securities of its
partners, members or shareholders; (v) will allocate fairly and reasonably
shared expenses, including without limitation shared office space, and use
separate stationery, invoices and checks; (w) other than as permitted by the
Credit Documents and the Loan Documents, will not pledge its assets for the
benefit of any other person or entity; (x) will hold itself out and identify
itself as a separate and distinct entity under its own name and not as a
division or part of any other person or entity; (y) will not make notes to
any person or entity; (z) will not identify its partners, members or
shareholders, or any Affiliates of any of them, as a division or part of it;
(aa) if such entity is a limited liability company, its articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall provide that such entity will dissolve only upon (A) the
date specifically set forth in such documents for the termination of the term
of such entity (which date shall be at a minimum ten years after the Maturity
Date (as defined in each of the Notes) or (B) the bankruptcy of the
administrative member; (bb) except as permitted under this Agreement will not
enter into or be a party to any transaction with its partners, members,
shareholders or Affiliates except in the ordinary course of its business and
on terms which are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party; (cc) will
pay the salaries of its own employees from its own funds; (dd) has adequate
capital in light of its contemplated business operations; and (ee) if such
entity is a limited liability company or limited partnership, and such entity
has one or more
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administrative members or general partners, as applicable, then such entity's
organizational documents shall provide that such entity shall continue (and
not dissolve) for so long as (A) a solvent administrative member or general
partner, as applicable, exists or (B) until the date specifically set forth
in such organization documents for the termination of the term of such
entity's organizational documents (which date shall be at a minimum ten years
after the Maturity Date).
1.55 "TAX MATTERS PARTNER" has the meaning set forth in
SECTION 7.4.
1.56 "TRANSFER" means, as a noun, any voluntary or
involuntary transfer, sale, pledge, hypothecation or other disposition or
encumbrance and, as a verb, voluntarily or involuntarily to transfer, sell,
pledge, hypothecate or otherwise dispose of or encumber.
1.57 "TRANSFEREE" means any Person who has acquired a
beneficial interest in the Interest of a Partner in the Partnership.
1.58 "UNIT" means an ownership interest in the
Operating Partnership, which Unit is exchangeable into one common share of
PGRT, subject to adjustment as set forth in the OP Agreement.
1.59 "WITHDRAWING PARTNER" has the meaning set forth in
SECTION 9.5.
1.60 "VORNADO LOAN AGREEMENT" means that certain
agreement loan agreement among Vornado PS, L.L.C. (the "VORNADO LENDER"),
the Partnership, Members of the Guarantor Group named therein and Xxxxxxx X.
Xxxxxxx, dated as of the date hereof, as subsequently amended, modified,
supplemented or restated, pursuant to which the Partnership has borrowed up
to $62,000,000.
1.61 "VORNADO LOAN" means that certain loan in the
principal amount of $62,000,000 made by the Vornado Lender to the Partnership
pursuant to the Vornado Loan Agreement.
ARTICLE II
THE PARTNERSHIP
2.1 ORGANIZATION. The Partners form the Partnership
upon all of the terms, covenants and conditions herein contained, solely for
the purpose and scope set forth in this Agreement. Except as otherwise
expressly provided herein to the contrary, the administration and termination
of the partnership, and the rights and obligations of the Partners, shall be
governed by the Delaware Revised Uniform Limited Partnership Act.
2.2 PARTNERSHIP NAME. The name of the Partnership
shall be "Primestone Investment Partners L.P." and all business of the
Partnership shall be conducted in such name or such other name as the General
Partner shall determine. The Partnership shall hold all of its property in
the name of the Partnership and not in the name of any Partner.
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2.3 PURPOSE. The purpose and business of the
Partnership shall be to exist as a Single Purpose Entity and to acquire,
hold, finance, encumber, exchange, dispose of or otherwise deal with Units or
the proceeds of Units and to do any and all other acts which may be necessary
or incidental to the foregoing, subject to the requirement that the
Partnership at all times be and remain a Single Purpose Entity.
2.4 PRINCIPAL PLACE OF BUSINESS. The principal place
of business of the Partnership shall be 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000 or such other location as may be Approved by the
General Partner from time to time.
2.5 TERM. The term of the Partnership shall commence
on the date of the execution of this Agreement and the filing of the
Certificate in the applicable governmental office in the State of Delaware in
accordance with the Act (or any predecessor statutes to the Act) and shall
continue until the winding up and liquidation of the Partnership and its
business is completed, as provided in ARTICLE X hereof.
2.6 SCOPE OF AUTHORITY. Except as expressly and
specifically provided in this Agreement, no Partner shall have any authority
to act for, or assume any obligations or responsibility on behalf of, the
other Partners or the Partnership.
2.7 RESERVATION OF OTHER BUSINESS OPPORTUNITIES. No
business opportunities other than those actually exploited by the Partnership
pursuant to SECTION 2.3 shall be deemed the property of the Partnership, and
any Partner or its Affiliates may engage in or possess an interest in any
business venture, independently or with others, of any nature or description;
and neither any other Partner nor the Partnership shall have any rights by
virtue hereof in and to such other business ventures, or to the income or
profits derived therefrom. The provisions of this SECTION 2.7 shall be
subject to, and not in any way affect the enforceability of, any separate
agreement by a Partner or any Affiliate thereof restricting or prohibiting
certain business activities of such Partner or Affiliate.
2.8 FILINGS; AGENT FOR SERVICE OF PROCESS.
(a) As soon as practicable after execution of this
Agreement, the General Partner shall file the Certificate in the office of
the Secretary of State of Delaware in accordance with the provisions of the
Act. The General Partner shall take any and all other actions reasonably
necessary to perfect and maintain the status of the Partnership as a limited
partnership under the laws of the State of Delaware. The General Partner
shall cause amendments to the Certificate to be filed whenever required by
the Act. Such amendments may be executed by the General Partner only.
(b) The General Partner shall execute and cause to be
filed original or amended Certificates and shall take any and all other
actions as may be reasonably necessary to perfect and maintain the status of
the Partnership as a limited partnership or similar type of entity under the
laws of any other states or jurisdictions in which the Partnership engages in
business.
(c) The agent for service of process on the
Partnership in the State of Delaware, and other appropriate states, shall be
CT Corporation or such other or successor registered agents as may be
selected by the General Partner.
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(d) Upon the dissolution of the Partnership, the
General Partner (or, in the event there is no remaining General Partner, the
Person responsible for the winding up and dissolution of the Partnership)
shall promptly execute and cause to be filed certificates of dissolution in
accordance with the Act and the laws of any other states or jurisdictions in
which the Partnership has filed certificates.
ARTICLE III
PARTNERS' CAPITAL CONTRIBUTIONS;
ADDITIONAL FINANCING AND CONTRIBUTIONS
3.1 SCHEDULED CAPITAL CONTRIBUTIONS. As of the
execution and delivery of this Agreement, Prime GP and PGI shall contribute
(or shall be credited as having contributed) to the Partnership the amounts
listed on Exhibit A hereto.
3.2 CAPITAL ACCOUNTS. The name, address and Percentage
Interest of each Partner are set forth on EXHIBIT A attached hereto. A
separate "Capital Account" shall be maintained by the Partnership for each
Partner in accordance with this SECTION 3.2 and the definitions hereof. The
Capital Account balances of each Partner as of the date of execution of this
Agreement are as described in EXHIBIT A.
3.3 ADDITIONAL FINANCING. The sums of money required
to finance the business and affairs of the Partnership were or shall be
derived (a) from the Prudential Loan in the aggregate principal amount of up
to $40,000,000, (b) from the Vornado Loan in the aggregate principal amount
of $60,000,000, (c) from the Capital Contributions made on or prior to the
date hereof by the Partners to the Partnership, (d) from funds generated from
the operation and the business of the Partnership and (e) from any additional
Capital Contributions, loans, bond financing or other indebtedness incurred
by the Partnership to the extent permitted by the Loan Documents with
Prudential and the Credit Documents with Vornado. Subject to any limitations
contained in the Loan Documents with Prudential and the Credit Documents with
Vornado, in the event the General Partner determines that additional
financing is needed by the Partnership for any reason (the "Required Funds"),
the General Partner may, in such amounts and at such times as the General
Partner shall determine to be necessary or appropriate, cause the Partnership
to borrow money, enter into loan arrangements, issue debt securities, obtain
letters of credit or otherwise borrow money on a secured or unsecured basis.
If such financing is not available to the Partnership or, in the reasonable
determination of the General Partner is not available at a reasonable cost or
upon reasonable terms and conditions, then the General Partner may seek
additional Capital Contributions from the Partners in accordance with SECTION
3.4 hereof.
3.4 CAPITAL CALLS.
(a) If the General Partner determines that Required
Funds are needed and that financing therefore (in addition to the funds
available under the Partnership Loan Agreement) is not available as set forth
in SECTION 3.3 hereof, the General Partner may, by notice to the other
Partners (the "Cash Needs Notice"), given at any time or from time to time,
call upon each Partner to contribute to the Partnership a share of the
Required Funds equal to its Percentage
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Interest of the Required Funds. Each Partner's share of the Required Funds
set forth in the Cash Needs Notice is referred to herein as the "Requested
Amount." A Cash Needs Notice shall be executed by the General Partner and be
accompanied by documentation confirming the actual or estimated amount of
such cash needs and itemizing how the Required Funds will be applied.
(b) Within thirty (30) days after the giving of the
Cash Needs Notice, each Partner shall contribute to the Partnership an amount
equal to such Partner's Requested Amount. If any Partner (a "Non-contributing
Partner") fails to advance to the Partnership such Partner's Requested Amount
when required to do so, a Partner which has advanced its Requested Amount
(the "Contributing Partner"), shall have the right to make a loan (a "Capital
Loan") to the Non-contributing Partner by advancing to the Partnership the
Requested Amount due from the Non-contributing Partner.
(c) If a Contributing Partner elects to make a Capital
Loan, the Capital Loan made by the Contributing Partner shall bear interest
at a rate equal to twenty percent (20%) per annum compounded annually.
Thereafter, all Available Cash Flow or other proceeds which would otherwise
be payable or distributable to the Non-contributing Partner shall be paid or
distributed to the Contributing Partner making a Capital Loan until such
Contributing Partner has received an amount equal to the outstanding
principal balance of the Capital Loan plus all accrued and unpaid interest as
aforesaid on the amount remaining from time to time outstanding. All funds so
paid or distributed to the Contributing Partner as a result of the Capital
Loan shall be applied first to accrued and unpaid interest and then to
principal. Notwithstanding anything to the contrary contained herein, a
Non-contributing Partner shall have the right to repay in full or in part at
any time any Capital Loan made the Contributing Partner, any such payment
being applied first to accrued and unpaid interest and then to principal on
such Capital Loan. Each Capital Loan and all accrued and unpaid interest
thereon shall be due and payable by the Non-contributing Partner to the
Contributing Partner (with full recourse) on the date five years from the
date of advance of such Capital Loan if not required to be repaid earlier as
provided herein.
3.5 ADDITIONAL LOANS OR CAPITAL CONTRIBUTIONS BY
PARTNERS. Except as expressly provided in this ARTICLE III, no Partner shall
make any loan or Capital Contribution to the Partnership unless Approved by
the General Partner.
3.6 NO THIRD PARTY BENEFICIARIES. Notwithstanding
anything herein to the contrary, no creditor of the Partnership or any other
Person (other than the Partners) shall be entitled to enforce the obligations
of the Partners under this ARTICLE III to make Capital Contributions to the
Partnership.
ARTICLE IV
ALLOCATIONS
4.1 PROFITS AND LOSSES. After giving effect to the
special allocations set forth in SECTION 4.3 hereof, Profits for any
Partnership taxable year that includes, or begins subsequent to, the date
hereof shall be allocated as follows:
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(a) PROFITS -- PARTNERSHIP OPERATIONS. Profits for any
taxable year of the Partnership shall be allocated among the Partners, PRO
RATA, in accordance with their respective Percentage Interests.
4.2 ALLOCATION OF LOSSES. After giving effect to the
special allocations set forth in SECTION 4.3 hereof, Losses for any
Partnership taxable year that includes, or begins subsequent to, the date
hereof shall be allocated among the Partners, PRO RATA, in proportion to
their Percentage Interests.
4.3 SPECIAL ALLOCATIONS. The following special
allocations will be made in following order and priority:
(a) If there is a net decrease in Partnership Minimum
Gain during any Partnership taxable year, each Partner will be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the extent of, an
amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain determined in accordance with Regulations Section 1.704-2(g)(2).
The items to be allocated will be determined in accordance with Regulations
Section 1.704-2(f). This SECTION 4.3(a) is intended to comply with such
Sections of the Regulations and will be interpreted consistently therewith.
(b) The allocations otherwise required pursuant to
SECTION 4.3(a) hereof will not apply to a Partner to the extent that: (i)
such Partner's share of the net decrease in Partnership Minimum Gain is
caused by a guaranty, refinancing or other change in the instrument
evidencing a nonrecourse debt of the Partnership which causes such debt to
become a partially or wholly recourse debt or a Partner Nonrecourse Debt, and
such Partner bears the economic risk of loss (within the meaning of
Regulations Section 1.752-2) for such changed debt; or (ii) such Partner's
share of the net decrease in Partnership Minimum Gain results from the
repayment of a nonrecourse liability of the Partnership, which repayment is
made using funds contributed by such Partner to the capital of the
Partnership; or (iii) the Internal Revenue Service, pursuant to Regulations
Section 1.704-2(f)(4), waives the requirement of such allocation in response
to a request for such waiver made by the General Partner on behalf of the
Partnership; or (iv) additional exceptions to the requirement of such
allocation are established by revenue rulings issued by the Internal Revenue
Service pursuant to Regulations Section 1.704-2(f)(5), which exceptions apply
to such Partner, as determined by the General Partner.
(c) If there is a net decrease in Partner Minimum Gain
attributable to Partner Nonrecourse Debt during any Partnership taxable year,
determined in accordance with Regulations Section 1.704-2(i)(3), then, except
as provided in Regulations Section 1.704-2(i)(4), each Partner who has a
share of the Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5), will
be allocated items of income and gain for such Partnership taxable year (and,
if necessary, subsequent Partnership taxable years) equal to such Partner's
share of the net decrease in Partner Minimum Gain. The items to be allocated
will be determined in accordance with Regulations Section 1.704-2(j)(2). This
SECTION 4.3(c) is intended to comply with Regulations Section 1.704-2(i) and
will be applied and interpreted in accordance with such Regulation.
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(d) Any item of Partnership loss, deduction or
expenditure under Code Section 705(a)(2)(b) attributable to Partner
Nonrecourse Debt will be allocated in accordance with Regulations Section
1.704-2(i) to the Partner who bears the economic risk of loss for such
Partner Nonrecourse Debt.
(e) In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) resulting in an Adjusted Capital Account
Deficit for such Partner, items of income and gain will be specially
allocated to such Partner in any amount and manner sufficient to eliminate,
to the extent required by the Regulations, such Adjusted Capital Account
Deficit as quickly as possible. The items to be allocated will be determined
in accordance with Regulations Section 1.704-1(b)(2)(ii)(d)(6). This SECTION
4.3(e) is intended to comply with Regulations Section 1.704-1(b)(2)(ii)(d)
and will be applied and interpreted in accordance with such Regulation.
(f) In the event any Partner has a deficit Capital
Account at the end of any Partnership taxable year in excess of the sum of
the amount which such Partner is obligated to restore pursuant to any
provision of this Agreement or pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) and the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner will be specially
allocated items of Partnership income and gain (consisting of a pro rata
portion of each item of Partnership income and gain) to eliminate such excess
deficit Capital Account as quickly as possible, provided that an allocation
pursuant to this SECTION 4.3(f) will be made to a Partner if and only to the
extent that such Partner would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this ARTICLE IV have
been tentatively made.
(g) No items of loss or deduction will be allocated to
any Partner to the extent that any such allocation would cause the Partner to
have an, or increase the amount of an existing, Adjusted Capital Account
Deficit at the end of any Partnership taxable year. All items of loss or
deduction in excess of the limitation set forth in the immediately preceding
sentence will be allocated among such other Partners which do not have
Adjusted Capital Account Deficit balances, pro rata, in proportion to their
Percentage Interests, until no Partner may be allocated any further items of
loss or deduction without creating or increasing an Adjusted Capital Account
Deficit. Thereafter, any remaining items of loss or deduction will be
allocated to the Partners, pro rata, in proportion to their relative
aggregate Capital Contributions made prior to the last day of the period to
which the loss or deduction relates. To the extent an item of loss or
deduction is allocated pursuant to this SECTION 4.3(g) in a manner other than
in proportion to relative Percentage Interests, then in subsequent taxable
periods, items of income and gain shall be allocated to reverse any such
disproportionate allocation of items of loss or deduction.
(h) To the extent an adjustment to the adjusted tax
basis of any Property pursuant to Sections 734(b) or 743(b) of the Code is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss will be specially allocated among the Partners
in a manner consistent with the manner in
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which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
4.4 CURATIVE ALLOCATIONS.
(a) The "Regulatory Allocations" consist of the "Basic
Regulatory Allocations," as defined in SECTION 4.4(b) hereof, the
"Nonrecourse Regulatory Allocations," as defined in SECTION 4.4(c) hereof,
and the "Partner Nonrecourse Regulatory Allocations," as defined in SECTION
4.4(D) hereof.
(b) The "Basic Regulatory Allocations" consist of
allocations pursuant to SECTIONS 4.3(e), 4.3(f), 4.3(g) and 4.3(h) hereof.
Notwithstanding any other provision of this Agreement, other than the
Regulatory Allocations, the Basic Regulatory Allocations shall be taken into
account in allocating items of income, gain, loss and deduction among the
Partners so that, to the extent possible, the net amount of such allocations
of the Basic Regulatory Allocations and such other items to each Partner
shall be equal to the net amount that would have been allocated to each such
Partner as if the Basic Regulatory Allocations had not occurred. For purposes
of applying the foregoing sentence, allocations pursuant to this SECTION
4.4(b) shall only be made with respect to allocations pursuant to SECTION
4.3(h) hereof to the extent the General Partner reasonably determines that
such allocations will otherwise be inconsistent with the economic agreement
among the parties to this Agreement.
(c) The "Nonrecourse Regulatory Allocations" consist
of all allocations pursuant to SECTIONS 4.3(a) hereof. Notwithstanding any
other provision of this Agreement, other than the Regulatory Allocations, the
Nonrecourse Regulatory Allocations shall be taken into account in allocating
items of income, gain, loss and deduction among the Partners so that, to the
extent possible, the net amount of such allocations of the Nonrecourse
Regulatory Allocations and such other items to each Partner shall be equal to
the net amount that would have been allocated to each such Partner if the
Nonrecourse Regulatory Allocations had not occurred. For purposes of applying
the foregoing sentence, no allocations pursuant to this SECTION 4.4(c) shall
be made prior to the Partnership taxable year during which there is a net
decrease in Partnership Minimum Gain, and then only to the extent necessary
to avoid any potential economic distortions caused by such net decrease in
Partnership Minimum Gain.
(d) The "Partner Nonrecourse Regulatory Allocations"
consist of all allocations pursuant to SECTIONS 4.3(c) AND 4.3(d) hereof.
Notwithstanding any other provision of this Agreement, other than the
Regulatory Allocations, the Partner Nonrecourse Regulatory Allocations shall
be taken into account in allocating items of income, gain, loss and deduction
among the Partners so that, to the extent possible, the net amount of such
allocations of the Partner Nonrecourse Regulatory Allocations and such other
items to each Partner shall be equal to the net amount that would have been
allocated to each such Partner if the Partner Nonrecourse Regulatory
Allocations had not occurred. For purposes of applying the foregoing sentence
(i) no allocations pursuant to this SECTION 4.4(d) shall be made with respect
to allocations pursuant to SECTION 4.3(c) relating to a particular Partner
Nonrecourse Debt prior to the Partnership taxable year during which there is
a net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, and then only to the extent necessary to avoid any
potential economic distortions caused by such net decrease in Partner Minimum
Gain, and (ii) allocations pursuant
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to this SECTION 4.4(d) shall be deferred with respect to allocations pursuant
to SECTION 4.3(d) hereof relating to a particular Partner Nonrecourse Debt to
the extent the General Partner determines that such allocations are likely to
be offset by subsequent allocations pursuant to SECTION 4.3(c) hereof.
(e) The General Partner may, with respect to each
Partnership taxable year, (i) apply the provisions of SECTIONS 4.4(b), 4.4(c)
and 4.4(d) hereof in whatever order is likely to minimize the economic
distortions that might otherwise result from the Regulatory Allocations and
(ii) divide all allocations pursuant to SECTIONS 4.4(b), 4.4(c) and 4.4(d)
hereof among the Partners in a manner that is likely to minimize such
economic distortions.
4.5 OTHER ALLOCATION RULES.
(a) For purposes of determining the Profits, Losses or
any other items allocable to any period, Profits, Losses and any such other
items shall be determined on a daily, monthly or other basis, as determined
by the General Partner, using any permissible method under Code Section 706
and the Regulations thereunder.
(b) For purposes of Regulations Section 1.752-3(a)(3),
the Partners agree that Nonrecourse Liabilities of the Partnership in excess
of the sum of (i) the amount of Partnership Minimum Gain and (ii) the total
amount of built-in gain (as defined in Regulations Section 1.752-3(a)(2))
shall be allocated among the Partners in accordance with their respective
Percentage Interests.
(c) In the event Interests are transferred in
accordance with the provisions of ARTICLE VIII hereof during any Partnership
taxable year, the distributive share of Partnership income, gain, loss and
deductions attributable to such transferred Interests for that taxable year
shall be apportioned between the transferor Partner and the person to whom
the Interest is transferred (the "Transferee") as determined by the
Transferor and Transferee, but subject to the constraints and limitations
imposed by Code Section 706. Distributions with respect to Interests
transferred shall be made only to Partners of record on a date designated by
the General Partner as the date of such distribution.
4.6 TAX ALLOCATIONS; CODE SECTION 704(c).
(a) In accordance with Code Section 704(c) and the
Regulations thereunder, solely for income tax purposes, income, gain, loss
and deduction with respect to any property contributed to the capital of the
Partnership (including income, gain, loss and deduction determined with
respect to the alternative minimum tax) shall be allocated among the Partners
so as to take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes (including such
adjusted basis for alternative minimum tax purposes) and its initial Gross
Asset Value, including, but not limited to, special allocations to a
contributing Partner that are required under Code Section 704(c) to be made
upon distribution of such property to any of the non-contributing Partners.
(b) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to paragraph (ii) of the definition of
"Gross Asset Value" contained herein, solely for federal income tax purposes,
subsequent allocations of income, gain, loss and deduction with
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respect to such asset (including income, gain, loss and deduction determined
with respect to the alternative minimum tax) will take account of any
variation between the adjusted basis of such asset (including such adjusted
basis for alternative minimum tax purposes) and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to
allocations under this SECTION 4.6, including the selection of any allocation
method permitted under Regulations Section 1.704-3, will be made as Approved
by the General Partner. Except as otherwise provided in this SECTION 4.6, all
items of Partnership income, gain, loss, deduction and credit will for tax
purposes be divided among the Partners in the same manner as they share
correlative Profits, Losses or Partnership items of income, gain, loss or
deduction, as the case may be, for the taxable year. Allocations pursuant to
this SECTION 4.6 are solely for purposes of federal, state and local taxes
and will not affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of Profits, Losses or other items or
distributions pursuant to any provision of this Agreement.
(d) If any taxable item of income or gain is computed
differently from the taxable item of income or gain which results for
purposes of the alternative minimum tax, then to the extent possible, without
changing the overall allocations of items for purposes of either the
Partners' Capital Accounts or the regular income tax (i) each Partner will be
allocated items of taxable income or gain for alternative minimum tax
purposes taking into account the prior allocations of originating tax
preferences or alternative minimum tax adjustments to such Partner (and its
predecessors) and (ii) other Partnership items of income or gain for
alternative minimum tax purposes of the same character that would have been
recognized, but for the originating tax preferences or alternative minimum
tax adjustments, will be allocated away from those Partners that are
allocated amounts pursuant to clause (i) so that, to the extent possible, the
other Partners are allocated the same amount, and type, of alternative
minimum tax income and gain that would have been allocated to them had the
originating tax preferences or alternative minimum tax adjustments not
occurred.
(e) If any portion of gain recognized from the
disposition of property by the Partnership represents the "recapture" of
previously allocated deductions by virtue of the application of Code Section
1245 or 1250 ("RECAPTURE GAIN"), such Recapture Gain will be allocated as
follows:
FIRST, to the Partners, pro rata, in proportion to the lesser of
each Partner's (i) allocable share of the total gain recognized from the
disposition of such Partnership property and (ii) share of depreciation or
amortization with respect to such property (as determined under Regulations
Sections 1.1245-1(e)(2) and (3)), until each such Partner has been allocated
Recapture Gain equal to such lesser amount; and
SECOND, the balance of Recapture Gain will be allocated among the
Partners whose allocable shares of total gain exceed their shares of
depreciation or amortization with respect to such property (as determined
under Regulations Sections 1.1245-1(e)(2) and (3)), in proportion to their
shares of total gain (including Recapture Gain) from the disposition of such
property;
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provided, however, that no Partner will be allocated Recapture Gain under
this SECTION 4.6(e) in excess of the total gain allocated to such Partner
from such disposition.
ARTICLE V
DISTRIBUTIONS
5.1 DISTRIBUTIONS OF AVAILABLE CASH FLOW. Except as
otherwise provided in SECTION 5.2 hereof, and subject to the limitations set
forth in the agreements and documents evidencing or securing the Prudential
Loan and the Vornado Loan, Available Cash Flow, if any, shall be distributed
within ten days after the receipt of distributions from the Operating
Partnership to the Partners or otherwise upon receipt and, in each case, PRO
RATA, in accordance with their respective Percentage Interests. Except as
provided in ARTICLES IX OR X, the Partnership shall not distribute Property
(other than Available Cash Flow) unless Approved by the General Partner.
5.2 WITHHOLDING. Notwithstanding any other provision
of this Agreement, the General Partner is authorized to take any action that
it determines to be necessary or appropriate to cause the Partnership to
comply with any withholding requirements established under any federal, state
or local tax law, including, without limitation, withholding on any
distribution to any Partner. For all purposes of this ARTICLE V, any amount
withheld on any distribution and paid over to the appropriate governmental
body shall be treated as if such amount had, in fact, been distributed to the
Partner.
ARTICLE VI
MANAGEMENT OF PARTNERSHIP
6.1 MANAGEMENT OF PARTNERSHIP. The exclusive
management and control of the business and affairs of the Partnership shall
be vested in the General Partner, and all actions Approved by the General
Partner shall be deemed to be authorized and approved by or on behalf of the
Partnership. Each Partner hereby waives any and all claims such Partner may
have against the Partnership or any other Partner for breach of fiduciary
duty, or other similar responsibility or obligation, PROVIDED the Partnership
is managed, and all decisions affecting the Partnership are made, in
accordance with the terms of this Agreement. Notwithstanding the foregoing,
it is understood and agreed that, except as otherwise provided in this
Agreement, the General Partner shall have all of the rights and powers of a
general partner as provided in the Act and as otherwise provided by law. In
dealing with the General Partner on behalf of the Partnership, no Person
shall be required to inquire into the authority of the General Partner to
bind the Partnership. Persons dealing with the Partnership are entitled to
rely conclusively on the power and authority of the General Partner as set
forth in this Agreement.
6.2 GENERAL PARTNER. The General Partner shall be
responsible for conducting the ordinary and usual business and affairs of the
Partnership as more fully set forth herein.
6.3 APPROVAL OF THE GENERAL PARTNER. Except as
authorized pursuant to SECTION 6.4 below or otherwise contemplated in a
Budget Approved by the General Partner, no act, including without limitation,
voting of the Units, shall be taken or sum expended or obligation
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incurred by the Partnership, or the General Partner with respect to any
matter affecting the Partnership unless Approved by the General Partner.
6.4 DUTIES OF GENERAL PARTNER. The General Partner is
hereby authorized to and shall perform or cause to be performed the following
duties in accordance with and as limited by this Agreement and in accordance
with the Budget:
(a) Protect and preserve the title and interests of
the Partnership with respect to the Property owned by the Partnership;
(b) Pay all taxes, assessments and other impositions
applicable to the Property owned by the Partnership;
(c) Prepare and file tax returns and submit the
returns along with other required tax information to the Partners;
(d) Keep all books of account and other records of the
Partnership in accordance with the provisions of this Agreement;
(e) Employ independent professionals and consultants
necessary or appropriate to carry on the business of the Partnership;
(f) Maintain all funds held or received by the
Partnership and invest such funds on a short term basis, to the extent not
immediately needed for expenditures or distribution to the Partners, in (i)
direct obligations of the United States or an agency thereof, (ii) commercial
paper rated as P-1 by Xxxxx'x Investor Service or A-1 by Standard & Poor's
Corp. or similarly rated by any successor to either of such investment rating
services, (iii) readily redeemable money market funds, (iv) certificates of
deposit or banker's acceptances (with a maturity not greater than 90 days)
not to exceed One Hundred Thousand Dollars ($100,000) with any bank, or in
any amount if such bank has (A) an investment grade rating by Xxxxx'x
Investor Service or Standard & Poor's Corp. or any successor to either of
such investment rating services and (B) a net worth of at least Five Hundred
Million Dollars ($500,000,000) or (v) such other investments and accounts as
may be Approved by the General Partner;
(g) Deliver to the Partners, promptly after receipt,
copies of all notices received by the Partnership from third parties
asserting claims or exercising rights or options that are material to the
business of the Partnership;
(h) Obtain and maintain, as may be required by
applicable law, such licenses, permits and governmental authorizations as are
necessary for the lawful conduct of the business of the Partnership;
(i) To the extent that funds of the Partnership are
available therefor, pay all of the Partnership's debts and other obligations,
including, without limitation, all amounts payable under or in connection
with the Prudential Loan and the Vornado Loan, and make other expenditures in
accordance with an approved Budget;
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(j) Make distributions to the Partners in accordance
with ARTICLE V of this Agreement;
(k) Prepare and file all necessary reports, statements
and other documents with Governmental Authorities in connection with the
business of the Partnership;
(l) Perform and observe all covenants required to be
performed and observed under all documents evidencing or securing the
Prudential Loan or the Vornado Loan; and
(m) Perform all other acts and obligations provided
elsewhere in this Agreement to be performed by the General Partner.
The General Partner shall have the obligation to devote
such of its time to the affairs of the Partnership as is necessary for the
effective operation and management of the business of the Partnership. The
General Partner shall use its good faith efforts to perform its duties
described in this Agreement, but does not guarantee or warrant that such
duties can or will be performed, nor shall the General Partner be liable for
failure to perform any such duties, nor will any such failure constitute a
breach of any obligation or duty hereunder, unless such failure is the result
of gross negligence, fraud or bad faith, or willful misconduct (not including
actions or omissions taken or omitted in good faith and in a manner
reasonably expected to be in the best interests of the Partnership).
6.5 COMPENSATION OF PARTNERS.
(a) Except as may be expressly provided for in this
Agreement, in an Approved Budget, or hereafter Approved by the General
Partner, no payment will be made by the Partnership for the services of any
Partner or any member, employee, agent or partner of any Partner or an
Affiliate thereof.
(b) The General Partner, and all Affiliates thereof,
shall be reimbursed by the Partnership for the reasonable out-of-pocket
expenses incurred by the General Partner, or an Affiliate thereof, on behalf
of the Partnership in connection with the business and affairs of the
Partnership, including all legal, accounting, travel and other similar
expenses reasonably incurred by the General Partner in connection with the
management of the Partnership.
6.6 BUDGET. Prior to the commencement of each fiscal
year of the Partnership, the General Partner shall endeavor to prepare and
submit to the Partners for consideration a budget (the "Budget") setting
forth the estimated income and expenditures (capital, operating and other) of
the Partnership for such fiscal year. When Approved by the General Partner,
the General Partner shall implement the Budget and shall be authorized to
make the expenditures and incur the obligations provided for in the Budget.
The General Partner shall not pursue any activities or business on behalf of
the Partnership which are not contemplated by the Budget or otherwise
Approved by the General Partner.
6.7 LIMITATION OF LIABILITY. Neither the General
Partner, nor any officer, director, partner, employee or Affiliate of the
General Partner shall be liable, responsible or accountable in damages or
otherwise to the Partnership or any Partner for any action taken or failure
to act on behalf of the Partnership within the scope of the authority
conferred or
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obligation imposed on such Person by this Agreement or by law, unless such
action or omission was performed or omitted fraudulently or in bad faith or
constituted gross negligence or willful misconduct.
6.8 INDEMNIFICATION. The Partnership shall indemnify
and hold harmless each Partner and each of their respective partners,
officers, directors, stockholders, employees, agents and Affiliates
(collectively, the "Parties") from and against any loss, expense, damage or
injury suffered or sustained by the Parties (or any of them) by reason of any
acts, omissions, or alleged acts or omissions arising out of its or their
activities on behalf of the Partnership or in furtherance of the interests of
the Partnership, including, but not limited to, any judgment, award,
settlement, reasonable attorney's fees and other costs or expenses incurred
in connection with the defense of any actual or threatened action, proceeding
or claim provided that the acts, omissions or alleged acts or omissions upon
which such actual or threatened action, proceeding or claims are based were
not performed or omitted fraudulently or in bad faith or as a result of gross
negligence or willful misconduct by any such Party. Such indemnification
shall be made only to the extent of the assets of the Partnership.
6.9 NO PARTICIPATION IN MANAGEMENT. The Limited
Partner shall not participate in the management or control of the
Partnership's business, nor shall the Limited Partner transact any business
for the Partnership or have the power to act for or bind the Partnership,
said powers being vested solely and exclusively in the General Partner.
6.10 NO PERSONAL LIABILITY. Except as otherwise
specifically provided herein, the Limited Partner shall have no personal
liability whatsoever, whether to the Partnership, to any of the Partners or
to the creditors of the Partnership for the debts, obligations, expenses or
liabilities of the Partnership or any of its losses beyond such Partner's
Capital Contributions.
ARTICLE VII
BOOKS AND RECORDS
7.1 BOOKS AND RECORDS. The General Partner shall keep
proper and usual books and records pertaining to the Partnership's business
on an accrual basis in accordance with tax accounting principles or generally
accepted accounting principles consistently applied, showing all of its
assets and liabilities, receipts and disbursements, profits and losses,
Partners' Capital Contributions and distributions and all transactions
entered into by the Partnership. The books and records and all files of the
Partnership shall be kept at its principal office or such other place as the
Approved by the General Partner from time to time and the Partners and their
representatives shall at all reasonable times upon reasonable prior written
notice have reasonable access thereto during normal business hours for the
purpose of inspecting or copying the same. The fiscal year of the Partnership
shall end on December 31 of each year.
7.2 BANK ACCOUNTS. Funds of the Partnership shall be
deposited in an account or accounts in the bank or banks or other financial
institution or institutions Approved by the General Partner. Such account or
accounts shall be in the name of the Partnership and shall be subject to
withdrawal only upon signatures of those Persons authorized from time to time
by the General Partner.
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7.3 TAX RETURNS. Federal, state and local tax returns
of the Partnership shall be prepared and timely filed by or at the direction
of the General Partner at the expense of the Partnership.
7.4 TAX DECISIONS AND ELECTIONS. The General Partner
is hereby designated the "Tax Matters Partner" of the Partnership for all
purposes under this Agreement and as such term is defined under the Code. The
Tax Matters Partner shall make or revoke all elections and take all reporting
positions which, in its discretion, it deems necessary or desirable for the
Partnership. Each item of Partnership income and deduction shall be
separately reported on each Partner's income tax return, pursuant to
Regulations Section 1.702-1(a). The Tax Matters Partner shall, if requested
in writing by a Partner, make the election under Code Section 754. Tax
decisions and elections for the Partnership not provided for herein shall be
determined and made by the General Partner.
The following provisions shall apply with respect to the
Tax Matters Partner.
(a) The Tax Matters Partner shall be responsible for
the filing of the Partnership information returns required under Section 6031
of the Code. Within thirty (30) days after the receipt by the Tax Matters
Partner of the K-1 from the Operating Partnership, but no later than ten (10)
Business Days before the due date for filing of the Partnership tax returns
after giving effect to any requested extensions of such due date for filing,
the Tax Matters Partner shall furnish to the Partnership's accountants
sufficient information for the preparation of all required Partnership tax
returns.
(b) A Partner shall provide notice to the Tax Matters
Partner of its intent to file an original or an amended income tax return of
which such Partner will take a position with respect to a Partnership item
that is inconsistent with the position taken by the Tax Matters Partner on
the Partnership return. Such notice must be given at least thirty (30) days
prior to the filing of such return. At such time, such Partner shall provide
the Tax Matters Partner with a statement detailing the inconsistent item or
items contained in such return. Within ten (10) Business Days of receipt of
such statement, the Tax Matters Partner shall provide a copy of such
statement to each Partner.
(c) The Tax Matters Partner shall include in each
Partnership return sufficient information to entitle each eligible Partner
and any indirect partner (at its request) to notice from the Internal Revenue
Service pursuant to Section 6223(a) of the Code.
(d) Each Partner reserves the right to enter into a
separate settlement agreement with the Internal Revenue Service. A Partner
who enters into a settlement agreement with the Internal Revenue Service
concerning a Partnership item shall notify the Tax Matters Partner of its
terms within ten (10) days of such agreement, and the Tax Matters Partner
shall notify the other Partners of the terms of such agreement with ten (10)
Business Days after receiving such notice. The Tax Matters Partner shall
notify each other Partner of the terms of any settlement offer received by it
within ten (10) Business Days of receiving such offer.
(e) Each Partner reserves the right to file an
administrative adjustment request under Section 6227 of the Code. Any Partner
filing an administrative adjustment request shall
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notify the Tax Matters Partner of its contents within ten (10) Business Days
after filing such request. The Tax Matters Partner shall notify each Partner
of the contents of such request within ten (10) Business Days of the receipt
of such notice.
(f) All Partners shall report to the Tax Matters
Partner the conversion of a Partnership item to a nonpartnership item under
Section 6231(b) or any other provision of the Code within ten (10) Business
Days of learning of the conversion.
(g) The General Partner reserves the right to file a
petition for judicial review and to participate in a judicial proceeding
under Section 6226 and 6228 of the Code. If the Tax Matters Partner files a
petition for judicial review of an appeal under Section 6226 of the Code, it
shall notify each Partner of such Petition or appeal within ten (10) days of
such filing. Any other Partner filing a petition for judicial review or any
appeal under Sections 6226 or 6228 of the Code shall notify the Tax Matters
Partner of such petition or appeal on or before the date of filing. The Tax
Matters Partner shall notify each Partner of such filing within ten (10)
Business Days of receipt of such notice from the filing Partner.
(h) The provisions of this Section shall govern the
conduct of all parties who are currently Partners and all parties who were
Partners during the applicable Partnership taxable year. A Partner shall not
be relieved of any duties or responsibilities imposed under this Section by
the termination or Transfer of its Interest in the Partnership.
(i) All terms used in this Section that are defined in
Section 6231(a) of the Code shall have the meanings set forth therein.
7.5 TAX EXAMINATION. Each Partner shall give prompt
notice to the other Partners upon receipt of notice that the Internal Revenue
Service or any state or local taxing authority intends to examine any
Partnership income tax returns. The Tax Matters Partner shall promptly notify
the Partners of the commencement of any administrative or judicial
proceedings involving the tax treatment of items of Partnership income, loss,
deductions and credits, and shall further keep the Partners fully informed of
all material developments involved in such proceedings.
7.6 FINANCIAL STATEMENTS. The General Partner may
cause the books of the Partnership to be examined, certified and audited
annually as of the end of each fiscal year of the Partnership by Ernst &
Young LLP or such other recognized firm of independent certified public
accountants that is Approved by the General Partner. For each fiscal year of
the Partnership, the General Partner may cause such accountants to determine
and prepare full financial statements, including, without limitation, a
balance sheet, an income statement, a statement of changes in financial
position and a statement of Available Cash Flow. The General Partner shall as
soon as reasonably practical after the end of each such fiscal year of the
Partnership, transmit copies of the foregoing to each Partner. The cost of
all audits and reports provided to the Partners pursuant to this Section
shall be an expense of the Partnership.
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ARTICLE VIII
TRANSFER OR ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 RESTRICTIONS ON TRANSFER. Except as permitted by
this ARTICLE VIII, no Partner may Transfer all or any portion of its rights
or Interest in the Partnership or withdraw or retire from the Partnership
without the Approval of the General Partner, and any such attempted Transfer,
withdrawal or retirement not permitted hereunder shall be null and void;
provided, however, any Partner may Transfer its Interests to an Affiliate
without the Approval of the General Partner but no such Transfer by a Partner
to an Affiliate shall relieve the transferring Partner of its obligations
hereunder unless Approved by the General Partner. So long as either the
Prudential Loan or the Vornado Loan is outstanding, the General Partner may
not Transfer all or any portion of its rights or Interest in the Partnership
or withdraw or retire from the Partnership without the consent of Vornado, to
the extent the Vornado Loan is outstanding, or Prudential, to the extent the
Prudential Loan is outstanding, and any such attempted Transfer, withdrawal
or retirement not permitted hereunder shall be null and void; provided,
however, any Partner (other than the General Partner) may Transfer its
Interests to an Affiliate without the Approval of the General Partner but no
such Transfer by a Partner to an Affiliate shall relieve the transferring
Partner of its obligations hereunder unless Approved by the General Partner.
8.2 EFFECT OF TRANSFERS. In the event of any transfer
or transfers permitted under this ARTICLE VIII, the Interests so transferred
shall be and remain subject to all of the terms and provisions of this
Agreement; the transferee shall be deemed to have assumed all of the
obligations hereunder relating to the Interests so transferred; and except as
set forth in SECTION 8.1, the transferor shall be deemed relieved of all
obligations hereunder relating to the Interests so transferred that arise
from and after the date of such transfer. Such Transferee shall become a
substitute General Partner (if the Interest acquired is that of a General
Partner) or substitute Limited Partner (if the Interest acquired is that of a
Limited Partner) upon, and only upon (i) execution by the transferor and
Transferee of such documents as counsel for the Partnership may reasonably
require to effect such admission and assumption of the obligations hereunder;
and (ii) payment of all reasonable expenses incurred in connection with such
admission. A substitute General Partner or substitute Limited Partner has all
of the rights and powers and is subject to all of the restrictions and
obligations of its transferor. A Transferee of a Partner who is not admitted
as a substitute General Partner or substitute Limited Partner has no right to
interfere with or participate in the administration of the Partnership's
business, operations, activities or affairs, to acquire any information or
account of Partnership transactions or to inspect the Partnership books and
shall not be deemed a "substituted general partner" or "substituted limited
partner" as such terms are defined in the Act.
ARTICLE IX
SINGLE PURPOSE ENTITY
9.1 SINGLE PURPOSE ENTITY. So long as either the
Vornado Loan or the Prudential Loan is outstanding, the Partnership
represents, warrants and covenants that it will at all times maintain its
existence as a Single Purpose Entity and the General Partner represents,
warrants and covenants that it will at all times maintain its existence as a
Single Purpose Entity.
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9.2 NO AMENDMENTS TO THIS SECTION. So long as either
the Vornado Loan or the Prudential Loan is outstanding, the Partners shall
not amend or modify this Article IX or Section 8.1 with the prior written
consent of the Vornado Lender, to the extent the Vornado Loan is outstanding,
or the Prudential Lender, to the extent the Prudential Loan is outstanding,
or each of the aforementioned lenders to the extent their respective loans
are outstanding.
9.3 ADDITIONAL PROVISIONS REGARDING OPERATION OF THE
PARTNERSHIP
(a) Notwithstanding any provision of law that
otherwise so empowers the Partnership, and notwithstanding any other
provision of this Agreement other than, with respect to clause (iii) below or
Section 10.1(a) hereof, so long as the Notes (as defined in the Vornado Loan
and the Prudential Loan) are outstanding, the Partnership shall not:
(i) amend, alter, change or repeal Section 1.24, Section
1.54, Section 2.3 or Article IX;
(ii) engage in any business or activity other than as
authorized by Section 2.3;
(iii) dissolve or liquidate, in whole or in part;
(iv) consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially or in
their entirety to any entity, or permit any Person to merge into the
Partnership or convey, transfer or lease its Property and assets
substantially or in their entirety to the Partnership;
(v) incur any debt in violation of the provisions of the
Credit Documents (as defined in the Vornado Loan Agreement or the Loan
Documents (as defined in the Prudential Loan Agreements);
(vi) have assets other than those related to its interest
in the Collateral (as defined in the Vornado Loan Agreement and the
Prudential Loan Agreement) or the ownership and financing thereof or
any indebtedness other than the Vornado Loan and the Prudential Loan;
(vii) guarantee or otherwise obligate itself with respect
to the debts of any other Person or hold out its credit as being
available to satisfy the obligations of any other Person; or
(viii) except as permitted by each Lender (as defined in
each of the Loan Agreements) in writing, amend or modify this
Agreement.
(b) Finance hereby acknowledges and agrees that its board
of directors shall, at all times, include at least one Independent Director. The
members of Prime GP hereby acknowledge and agree that, in the event of the
voluntary withdrawal of Finance or any other Single Purpose Entity which shall
become a Member pursuant to Section 6.7(b) of the Amended and Restated Limited
Liability Company Agreement of Prime GP (the "LLC Agreement"), or any other
event or occurrence pursuant to which Finance or such other Single Purpose
Entity shall no longer be a Member of Prime GP, such withdrawal shall be of no
effect until a Single
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Purpose Entity shall be a Member such that Prime GP will at all times have at
least one Member that is a Single Purpose Entity.
(c) Notwithstanding any provision of law that
otherwise so empowers the Partnership, and notwithstanding any other
provision of this Agreement, so long as the Notes are outstanding, the
Partnership shall not, without the unanimous consent of all Members of the
Prime GP and the unanimous consent of the board of directors of Finance or
any other Single Purpose Entity which became a Member of Prime GP pursuant to
Section 6.7(b) of the LLC Agreement, on its own behalf or on behalf of any
direct or indirect subsidiary, acquiesce, petition or otherwise invoke or
cause any other person to invoke the process of the United States of America,
any state or other political subdivision thereof or any other jurisdiction,
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case against the corporation or any such
subsidiary under a federal or state bankruptcy, insolvency or other similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Partnership or any such
subsidiary or all or any part of the property or assets of any such entity or
ordering the winding-up or liquidation of the affairs of the corporation or
any subsidiary, or make any assignment for the benefit of the Partnership's
or any such subsidiary's creditors, or admit in writing its inability to pay
its debts generally as they become due or admit in writing the inability of
any of its subsidiaries to pay its respective debts when due, or take any
action in furtherance of the preceding action
ARTICLE X
DISSOLUTION AND WINDING UP
10.1 LIQUIDATING EVENTS. Subject to Section 9.3 hereof,
the Partnership shall dissolve and commence winding up and liquidating upon
the first to occur of any of the following ("Liquidating Events"):
(a) December 31, 2050;
(b) the sale of all or substantially all of the Property;
(c) the unanimous agreement of all Partners; or
(d) any event causing the dissolution of the
Partnership under the Act unless the remaining Partners, upon a vote taken
within thirty (30) days of the event triggering such dissolution, unanimously
agree to continue the Partnership.
The Partners hereby agree that, notwithstanding any provision of the Act, the
Partnership shall not dissolve prior to the occurrence of a Liquidating Event.
10.2 WINDING UP. Upon the occurrence of a Liquidating
Event, the Partnership shall continue solely for the purpose of winding up
its affairs in an orderly manner, liquidating
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its assets and satisfying the claims of its creditors and Partners. No
Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event there are no General Partner, the
Limited Partner or any Person elected by the Limited Partner (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the
Partnership's liabilities, and the Property shall be liquidated as promptly
as is consistent with obtaining the fair value thereof, and the proceeds
therefrom, to the extent sufficient, shall be applied and distributed in the
following order:
(a) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors, other than Partners, in the
order of priority as provided by law;
(b) Second, to the establishment of reserves in
amounts established by the Liquidator to provide for contingent liability, if
any;
(c) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to Partners;
(d) Fourth, the balance, if any, to the General
Partner and Limited Partner in accordance with their respective Capital
Accounts, after giving effect to all contributions, distributions and
allocations for all periods, including the period in which such distribution
occurs.
Within a reasonable time following the completion of the
liquidation of the Property (but not longer than 90 days), the Liquidator
shall furnish to all of the Partners a statement which shall set forth the
assets and liabilities of the Partnership as of the date of complete
liquidation and the portion of distributions to which each Partner is
entitled. No Partner shall have any right to demand or receive property other
than cash upon dissolution and liquidation of the Property or to demand the
return of its Capital Contributions from the Partnership. Upon completion of
the liquidation of the Partnership and the distribution of all Partnership
funds, the Partnership shall terminate, and the Liquidator shall have the
authority to execute and record documents required to effectuate the
dissolution and termination of the Partnership.
10.3 DEFICIT CAPITAL ACCOUNT BALANCE. If, upon
liquidation of the Partnership pursuant to SECTION 10.2(d), any Partner (or
any Person which is an Transferee of or successor to any Interest of such
Partner) has a deficit Capital Account, such Partner (or such Transferee or
successor of such Partner) shall have no obligation to make any contribution
to the capital of the Partnership with respect to such deficit, and such
deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever. In the discretion of the Liquidator,
in order to comply with the requirements of Regulations Section
1.704-1(b)(ii)(b)(2) or otherwise, a PRO RATA portion of the distributions
that would otherwise be made to the General Partner and Limited Partner
pursuant to SECTION 10.2 may be:
(a) distributed to a trust established for the benefit
of the General Partner and the Limited Partner; PROVIDED such trust is a
liquidating trust or a grantor trust for federal income tax purposes, for the
purpose of liquidating Partnership assets, collecting amounts owed to the
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Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership. The assets of any such trust shall be
distributed to the General Partner and the Limited Partner from time to time
at such times and in such amounts as determined, in the reasonable discretion
of the Liquidator, to be appropriate in the same proportions as the amount
distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and the Limited Partner pursuant to
SECTION 10.2; or
(b) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the Partnership;
PROVIDED that such withheld amounts shall be distributed to the General
Partner and the Limited Partner as soon as practicable.
ARTICLE XI
MISCELLANEOUS
11.1 NOTICES. Any notice or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given on the date of service if served personally; three (3)
business days after the date of mailing, if mailed, by first class mail,
registered or certified, postage prepaid; one (1) business day after delivery
to the courier if sent by private receipt courier guaranteeing next day
delivery, delivery charges prepaid; the date of receipt by the sender of an
answer back receipt, if sent by facsimile with answer back receipt, and in
each case, addressed as follows:
If to Prime GP to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and with a copy to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
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Facsimile No.: (000) 000-0000
and, if to Prime to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and with a copy to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
or to such other place as the respective Partner may, from time to time,
designate in a written notice to the other Partners. All communications among
Partners in the normal course of the Partnership business shall be deemed
sufficiently given if sent by regular mail, postage prepaid.
11.2 BINDING EFFECT. Except as otherwise provided in
this Agreement, every covenant, term and provision of this Agreement shall be
binding upon and inure to the benefit of the Partners and their respective
heirs, legatees, legal representatives, successors, transferees and assigns.
11.3 THIRD PARTIES. None of the provisions of this
Agreement shall be for the benefit of or enforced by any Person not a party
to this Agreement.
11.4 REMEDIES CUMULATIVE. No remedy herein conferred
upon any party is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. No single or partial exercise by any party of any
right, power or remedy hereunder shall preclude any other or further exercise
thereof.
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11.5 CONSTRUCTION. Every covenant, term and provision
of this Agreement shall be construed simply according to its fair meaning and
not strictly for or against any Partner.
11.6 HEADINGS. Section and other headings contained in
this Agreement are for reference purposes only and are not intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
11.7 SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or legality of the remainder of this Agreement.
11.8 INCORPORATION BY REFERENCE. Every exhibit,
schedule and other appendix attached to this Agreement and referred to herein
is hereby incorporated in this Agreement by reference.
11.9 FURTHER ACTION. Each Partner agrees to perform all
further acts and execute, acknowledge and deliver any documents which may be
reasonably necessary, appropriate or desirable to carry out the provisions of
this Agreement.
11.10 VARIATION OF PRONOUNS AND DESCRIPTIVE ADVERBS. All
pronouns and any variations thereof shall be deemed to refer to masculine,
feminine or neuter, singular or plural, as the identity of the Person or
Persons may require. Words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole, unless the context otherwise
requires.
11.11 GOVERNING LAW. The laws of the State of Delaware
shall govern the validity of this Agreement, the construction of its terms,
and the interpretation of the rights and duties of the Partners, without
regard to the principles of conflicts of laws.
11.12 WAIVER OF ACTION FOR PARTITION. Each of the
Partners irrevocably waives any right that it may have to maintain any action
for partition with respect to any of the Property.
11.13 COUNTERPART EXECUTION. This Agreement may be
executed in any number of counterparts with the same effect as if all of the
Partners had signed the same document. All counterparts shall be construed
together and shall constitute one agreement.
[signature pages follow]
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IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the day first above set forth.
PARTNERS
GENERAL PARTNER:
----------------
PG/PRIMESTONE, L.L.C.
its general partner
By: THE PRIME GROUP, INC.
its Administrative Member
By: ________________________________
Name:______________
Title:_____________
LIMITED PARTNER:
----------------
THE PRIME GROUP, INC.
By: ________________________________
Name:______________
Title:_____________
EXHIBIT A
PARTNERS' CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND PERCENTAGE INTERESTS
CAPITAL CAPITAL PERCENTAGE
NAMES AND ADDRESSES CONTRIBUTIONS ACCOUNT INTERESTS
------------------- ------------- ------- ----------
GENERAL PARTNER
Prime GP $1,490,830 $26,242,429 99%
LIMITED PARTNER
PGI $265,075 $265,075 1%
TOTAL $1,755,905 $26,507,504 100%
